oil barrel 88.
(photo credit: )
Crude futures dipped Monday amid a measure of relief that Iran has accepted some parts of a Western offer aimed at getting the country to halt its nuclear program, even as it rejected others.
In its first specific comments on the incentive package, Iran said Sunday that the key issue of uranium enrichment - a process that can make nuclear fuel for a power plant or fissile material for an atomic bomb - needed clarification.
The incentives include promises that the United States and Europe will provide Iran nuclear technology and that Washington will join direct talks with Tehran.
Light sweet crude for July delivery was down 18 cents to US$71.45 a barrel in Asian electronic trading on the New York Mercantile Exchange. On Friday, the contract rose by more than a dollar to settle at US$71.63 a barrel.
But Victor Shum, an energy analyst based in Singapore with Texas-headquartered Purvin & Gertz said geopolitical worries will persist and keep a floor under oil prices.
"The market's aware that the Iranian issue is not going to be resolved in the short-term," Shum said. Prices will likely stay on the upward trend throughout the year, he predicted, but added that it will take a significant event to cause a sudden price surge.
"Right now, I don't see any cause for a surge," he said. "Prices will continue to trade in the tight band of around US$70 a barrel."
Iranian Foreign Ministry spokesman Hamid Reza Asefi told a press conference Sunday the package includes "points which are acceptable. There are points which are ambiguous. There are points that should be strengthened, and points that we believe should not exist." He did not give specifics.
The comments came as the United States and Europe lobbied other nations to join them this week in urging Iran to accept the offer - and warning of UN Security Council action if it does not - according to documents shared with The Associated Press in Vienna, Austria.
The Group of Eight finance ministers said Saturday that global economic growth remains strong but warned that high energy prices and global imbalances pose continuing dangers.
Recent data shows that US crude oil inventories are higher than a year ago. In its weekly report last Wednesday, the Energy Department said US crude stocks grew last week by 1.1 million barrels to 346.6 million barrels, or 4 percent above year-ago levels. Gasoline inventories grew by 1 million barrels to 210.3 million barrels, or 2.5 percent below year-ago levels.
Unleaded gasoline prices rose 0.51 cent to US$2.1579 a gallon, while heating oil fell marginally to US$2.0456 a gallon.
Natural gas fell 3.7 cents to US$6.135 per 1,000 cubic feet.